Statics and dynamics, Macroeconomics

Assignment Help:

 

Statics and Dynamics 

Economic models deal with stock and flow variables. These variables can be in one of the two states - equilibrium or disequilibrium - at a particular point in time. If the variables are in the equilibrium state and tend to repeat themselves from one time period to another, we have the case of "stationary equilibrium". If the variables are in a state of disequilibrium, in all likelihood they would have different values in the next time period.Models which do not consider explicitly the behavior of variables from one time period to another are called 'Static' models. In static models, the variables do not have time dimension. Because these models do not consider the passage of time, they cannot explain the process of change. Static models indicate the values of variables for a given time period but cannot indicate what their values will be in the next period. At the most they can only indicate the direction of change. In contrast, dynamic models consider explicitly the movement of variables over different time periods. What happens in one time period is related to what happened in the preceding time periods and what is expected to happen in the succeeding periods. In other words, variables in dynamic models are said to be 'dated'. These models indicate the movement of variables from one disequilibrium position to another, until the variables ultimately reach the equilibrium position.


Related Discussions:- Statics and dynamics

About assignment, i have assignment due within less than 24 hours if i sub...

i have assignment due within less than 24 hours if i submit assignment can i get it back before 24 hours?

Explain is curve with inflation, Q. Explain IS curve with inflation? T...

Q. Explain IS curve with inflation? The IS curve with inflation  We can draw IS curve for a given value of π e . As earlier explained, IS curve isn't affected by changes

Explain about IS-LM-model, Q. Explain about IS-LM-model? The key differ...

Q. Explain about IS-LM-model? The key difference between the IS-LM model and the cross model is that nominal interest rate is exogenous in cross model on the other handit is en

Macroeconomics , 1. Nations trade what they produce in excess of their own ...

1. Nations trade what they produce in excess of their own consumption to: A) generate jobs for the domestic economy. B) earn “good will” from the World Bank. C) prevent chronic sur

Tax-deductible and interest rate, Suppose that Lilistan has two types of ci...

Suppose that Lilistan has two types of citizens: low-income citizens (income = $20,000) and high-income citizens (income = $80,000). Interest income is currently taxed and each typ

Main causes of inflation in an economy, Question 1: Differentiate betwe...

Question 1: Differentiate between income, price and cross elasticities of demand. How will the concept of price elasticity be useful to the owner of a supermarket who wan

National income, how useful is national income statistics for indicating li...

how useful is national income statistics for indicating living standards

Healthcare cost, define the economic principle of opportunity cost explain ...

define the economic principle of opportunity cost explain whether spending 17.9% of gdp is too much or too little to spend on healthcare

Aggregate demand and aggregate supply model, In the late 1990s, a growing n...

In the late 1990s, a growing number of economists expressed concern that the world policy makers were often focusing too much on fighting inflation, without fully taking into accou

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd